For years, this program has been somewhat hidden from homeowners facing foreclosure. As the number of foreclosure cases grew into the thousands during the last couple years, more and more soon-to-be evicted families learned of the opportunity, whereby mortgage companies give money to the homeowners in exchange for handing over the keys to the house and leaving it in “broom-swept” condition. It is a way for the mortgage company to save money on litigation costs while ensuring the property will be well-kept until they can find a buyer to move in. Additionally, the homeowner is given a little help with moving expenses and the certainty of a move-out date.
We have received many questions in regards to Short Sales at The Dellutri Law Group this past week. To clarify the answers to some of these questions please view this video. This video explains the length of time it takes to complete a successful Short Sale. It could take as little as 10 weeks to over a year to complete.
If a Short Sale transaction is properly negotiated, the formal approval shall contain provisions that upon receipt of the proceeds from the closing of the short sale transaction, the Mortgage shall be satisfied and the Promissory Note cancelled/satisfied. If the Promissory Note or remaining indebtedness is addressed in the approval letter as being canceled or satisfied, the Short Sale Lender should issue a 1099C in the amount of the remaining outstanding indebtedness. If the remaining outstanding indebtedness is cancelled, there is no further obligation upon which a deficiency money judgment can be pursued.
A recent prediction is that mortgage foreclosures will continue to rise in 2011. It is estimated that 1.2 million homes will be foreclosed upon. That is quite a few homes after several years of outrageous numbers of homes in foreclosure already. It makes you wonder:
The biggest concern for me is: The whole mortgage modification disaster could be solved very simply by allowing homeowners to cram down their first mortgages on their homesteads.
Yes, more people would have to file for bankruptcy, but so what, we would be saving homes, clearing up debt problems and putting everyone, including this Country back onto the road to recovery.
There are some things in life that I will never understand.
Are you a homeowner in Fort Myers who has lost a job or lost some of your household income? Have you been unable to make your mortgage payment this month? If so, you may be facing the very difficult decision that so many homeowners in Florida are facing: should I keep this home? At Dellutri Law Group, we are seeing homeowners coming in the doors daily agonizing over this decision.
Trying to decide whether to try to keep a home through modification when you owe 2-3 times its value is a very personal one; and in order to make the best decision for yourself and your family, it’s important to consider many different factors:
- Recent studies are showing that foreclosures are on the rise again, and a report on Dow Jones newswire shows analysts predicting that home prices will continue to decline again this year. “Home prices are expected to decline again with risk of another 50% down to get house prices back to levels of 1999 / 2000”, says Richard Henry Suttmeier on Forbes.com. This is a very startling and scary prediction, but if it comes true, this could very well mean additional declines in home prices in Lee County in the near future.
Well, I knew it would get bad, but not this bad. It is predicted that 1 million homeowners in the United States will lose their homes to foreclosure this year. Are you kidding me, that is just insanity. And nothing is being done to stop the insanity. Next, the Federal Government is going to go back to these people whose homes were lost and say to them, well we know you lost your home, but, now we have to raise your taxes because of x, y or z. This is mind-boggling. In my opinion, many of these loses could have been prevented had our elected officials in Washington done the right thing, rather than the popular thing.
I cannot justify under any circumstances the wasteful spending of money. Our Federal Government has wasted and continues to waste taxpayer dollars with no accountability. Our American Dream has been leveraged, and we cannot afford to pay the bill. It makes me sick thinking that I am going to educate my children and they will be working their entire lives to pay for the hypocrites that we elected into office. I will stop the rant before I go off the deep end.
If you are one of the many Floridians that took out a second mortgage during times when home prices were on the rise, this entry is for you. I have met with many homeowners, especially in Southwest Florida, that are paying on two or more mortgages when their home value does not exceed the first mortgage. In these circumstances, a Chapter 13 bankruptcy may be able to help.
In a Chapter 13 bankruptcy, where the value of the home does not exceed the first mortgage, a Motion may be made to declare the second mortgage an unsecured non-priority debt, placing it in the same position as a credit card or other unsecured non-priority debt to be discharged. For example, where a home has a current value of $100,000, with a first mortgage balance of $150,000 and second mortgage value of $50,000, subsequent to the filing of a Chapter 13 bankruptcy petition, a Motion may be made to “strip” the $50,000 second mortgage, relieving the homeowner of that debt, allowing the homeowner the opportunity to focus on paying the first mortgage.
A Florida homeowner can walk away from a home, but will face foreclosure. This decision should be considered very carefully. Why?
Florida Foreclosures are starting to take a turn for the worst. In Florida, once a home is sold on the Courthouse steps, the lender must apply the monies received from the purchase to the balance of the loan. When I first started practicing law, deficiencies were unheard of, as home prices consistently went up; however, as we all know, those days are memories.
Now, it seems that all the homes being sold on the Courthouse steps are for less than the outstanding balance. Once the lender applies the proceeds of the sale to the outstanding balance, the borrower could be responsible for the remaining deficiency.
In the last two weeks, I've seen several lenders, mortgage companies and banks starting to pursue deficiencies against the former homeowners.
More on this later.....
Government officials are telling us that the recession is over, but the foreclosure crisis is still increasing in Florida and nationwide. Realty Trac released its US Foreclosure Market Report for the third quarter of 2009, which shows that foreclosure filings [including auction sales, default notices and bank repossessions] were reported on 937,840 properties in the third quarter - a 5% increase from from the second quarter of 2009. Significantly, this is almost 23% higher than last year at this time. Estimates are coming in that 1 in 136 US homes are experiencing some type of foreclosure issue. This is the highest that this rate has been since the foreclosure crisis began. The rate for Lee County is said to be 1 in 76 homes – and in some areas is significantly higher.
Florida is in the top 10 states for the highest foreclosure rate during this quarter, and is one of the 6 states [Florida, Ohio, Utah, Georgia, Michigan, Colorado and Illinois] which constitute 62% of the nation’s total foreclosure activity. Many reports have Florida at 4th in overall foreclosure activity in the nation. So even if you’re hearing that the recession is over, unfortunately for us, the foreclosure rates are most definitely not!
Posted by Shannon Houk
New numbers are coming out on foreclosures in the United States. They are not good. More than 13% of homeowners are either behind on their payments or are in foreclosure. Florida is taking a real beating in this economy. Almost 12% of all Florida home loans were in foreclosure, and there are countless more that are late on their payments.
Florida, California, Nevada and Arizona still are leading the way in foreclosures. 44% of all foreclosures are happening in these 4 states. That is shocking. What are their state governments doing about the situation? What is the Federal Government doing about the situation?
The News-Press published a little article on page B-10 this morning about the amount of bank debt among local banks. It appears that some local banks have significant debt problems. The article compared local banks, and their non-accruing real estate debt, from the second quarter of 2008 to the second quarter of 2009. It's not pretty.
Lee County Banks
Collier County Banks Highlights:
Hillcrest Bank of Florida From: $1.1 mill To: $21.7 mill
Liberty Bank From: $5.5 mill To: $15.5 mill
Bank of Naples From: $2.5 mill To: $7.5 mill
Royal Palm Bank of Florida From: $6.9 mill To: $19.7 mill
Bank of Florida Southwest From: $17.5 mil To: $ 83.7 mill
TIB Bank From: $19.5 mill To: $57.7 mill
Orion Bank From: $106.8 mill To: $210.4 mill
Florida Community Bank From: $102 mill To: $175.4 mill
These numbers are scary in and of themselves. Just imagine the lost revenue for the banks. How do they continue lending when they are not making ends meet themselves? It's not like there are companies beating down their doors to buy these loans at this time?
Even more interesting is the disparity between Lee and Collier Counties. Is it that more loans in Collier County are going into default? Or, are there less loans in Collier County with higher amounts defaulting?
Many people in Fort Myers, Lehigh Acres, Cape Coral, Naples, Port Charlotte, and Sarasota are finding themselves making one of the hardest decisions of their lives. Whether they should keep their current home, which may have between $50,000 to $100,000 in negative equity, or should they surrender their homes and rent for a year or two. There are many considerations which need to be resolved before making this decision.
Foreclosure rates in Southwest Florida are much higher in the last twelve months compared to the year before. It seems Fort Myers, Cape Coral and Lehigh Acres cannot catch a break. Average median home prices are way down and the number of delinquencies (people who are behind, but not yet in foreclosure) is going up, up, up. I'm sure this has something to do with our unemployment rate.
From April 2008 to March 31, 2009 over 45,000 foreclosures were filed in Lee Countyhttp://www.mortgagelawnetwork.com/more-homeowners-are-underwater-on-their-mortgages/, Florida. For the time frame April 2007 to March 31, 2008 approximately 20,500 foreclosures were filed. This is a dramatic increase. But, what is more concerning is the significant rise in the number of delinquencies.
Recently, Carmen Dellutri, a Board Certified Consumer Bankruptcy Attorney, was asked by the News Press to answer some questions about the mortgage modification bill. His answers appear at this link. I will admit that there is no editing and at one time I nearly broke the microphone. I also made a few errors. The Housing bill passed the House on March 5, 2009, not the first. Second, Senator Nelson's first name is Bill, not Tom. Although one could say he looks like a Tom.
I hope this helps.
Yesterday, the Senate voted No to a measure that would have allowed Bankruptcy Judges to modify first mortgages on homesteads in Bankruptcy Court. This was a very important measure for Florida residents, especially in towns like Cape Coral, Lehigh Acres and Fort Myers. The question that no-one seems to want to answer is this: Until these jokers in Washington finally decide to do something, how many more homes will be lost to foreclosure? Where was the President? Where was the White House? How come there was no pressure being applied from the Executive Branch?
That is the problem right now. People are losing their homes because the big money didn't want the legislation passed. JP Morgan Chase & Co., Bank of America and Wells Fargo took a combined $95 billion dollars from the taxpayers. Although I cannot say for sure, I just wonder how much of that money was spent lobbying the Senators who voted against this measure. Senator Dick Durbin said the fight is not over, and the measure will be introduced at some time in the future.
The first three months of 2009 in Fort Myers and Cape Coral, Florida seemed pretty normal, if your idea of normal is a horrible economy, excessive foreclosure filings and outrageous jobless numbers. Let's talk about the 24% increase in foreclosures in Lee County. This number will continue to rise until our elected officials do something about it. The housing bill would be a great start if the politicians would stop playing politics with the bill. During this time of crisis, the politicians are still debating the best way to handle this crisis. The House of Representatives passed a bill on March 1, 2209, and our Senators are, well, thinking about it. It seems to me that the housing issue would be important enough for our Senators to push this issue just a little.
The President's Housing Bill is about to be destroyed in the Senate. The most important provision is about to be deleted because it is not in the best interests of the banks. Shockingly, the Housing Bill is about to become a spending bill. This housing bill contained a provision which would allow bankruptcy judges to strip down first mortgages on personal residences. Out of all the noise contained with this bill, the one group of individual who should be complaining is the Bankruptcy Judges in Florida, Nevada, California, Ohio, and the other states where foreclosures are through the roof.
The Dellutri Law Group recently updated the website by adding a mortgage modification video to the website. Actually, it is a commercial that we shot but never ran because we did not need to run the commercial. We are being referred cases from clients, attorneys and people in the industry.
Additionally, there are 5 new bankruptcy videos as well in our media section. Please feel free to review them as well.
As you probably can tell from my previous posts, I am skeptical about the benefits of the new housing plan for Southwest Florida Residents. However, there may be real assistance on the horizon. The House of Representatives tonight passed meaningful legislation that may offer assistance to homeowners faced with high payments and low home values.
The legislation, that now faces scrutiny in the Senate, would allow borrowers to “cram down” their mortgage to reasonable payments and allow them to begin building equity in what is considered to be most people’s biggest asset. Individuals will be also be able to alleviate overwhelming debt that has resulted from using credit cards while trying to survive during these troubled economic times.
“Those that forget history are doomed to repeat it.”- Aristotle
-The government's new program to help homeowners creates an adjustable rate modification that starts with a low interest rate and then raises at the end of the modification period. Didn't adjustable rate mortgages help create this mess.
-Servicers who have constantly told homeowners that they have to be behind on their mortgage before they can help them and then ignore homeowners requests for help for weeks or months, get paid by the government to modify a loan despite the fact that they have not spent any money funding the loans .
President Obama released his plan to help the mortgage foreclosure crises. He calls it a housing plan. At the Dellutri Law Group, our team of consumer attorneys are analyzing this plan. Our initial evaluation is that it will NOT be adequate to help Southwest Florida in any meaningful manner. The News-press is reporting that the plan will help 34,000 residents in Southwest Florida.
The only meaningful modification will be if President Obama signs into law the Helping Families Save Their Homes in Bankruptcy Act 2009. This legislation will allow individuals to not only lower their mortgages, but also, reduce all of their debts.
The citizens of Lee County, Florida and the rest of Southwest Florida whose home values have nose-dived may have relief coming in the near future. The Mortgage Modification provisions contained in "The Helping Families Save Their Homes in Bankruptcy Act" is very likely to be voted on Wednesday of this week. That's right in the next two days. So, it is now more important than ever to notify your members of the House of Representative and the Senate. In Florida, click here for links to your Local Representative. It is important that you write, call or e-mail your local congressman and impress upon him or her the facts of this legislation. For More Information, please contact the author.